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What is "Prior Acts Coverage"?

"Prior Acts Coverage" is coverage and/or defense for unknown acts, errors, or omissions which occurred prior to the inception date of the first policy issued to the Named Insured.

"Prior Acts Coverage" may be limited to a "specific retroactive date" or may be as broad to include "full prior acts" which provides coverage from the earliest date of admission to any legal jurisdiction.

All "Prior Acts Coverage" is subject to all the terms and conditions of the claims-made policy currently in force (i.e. Definiton of Insured).

What is a "Claims-Made and Reported" policy?

A "Claims-Made and Reported" policy is a policy that is limited to claims arising from the performance of professional services which are first made against the Insured and reported in writing to the insurance company while the policy is in force subject to all the terms and conditions of the policy.

What is an "Extended Reporting Endorsement (TAIL)"?

An "Extended Reporting Endorsement (TAIL)" is an extension of time after the termination date of the policy to report an act, error or omission that occurred prior to the termination date and otherwise covered while the policy was in force.

The reporting period can range from 30 days to an unlimited period of time. The premium charge is typically a percentage of the last annual premium paid (i.e. 225% for an unlimited period of time).

What does the phrase "No Prior Acts Coverage" mean?

"No Prior Acts Coverage" means there is no coverage and/or defense for acts, errors, or omissions which occured prior to the inception date of the first policy issued to the Named Insured.

What is a “Step Rate” or “Step Rating System” as it relates to a Claims-Made Lawyers Professional Liability policy?

A “Step Rate” or “Step Rating System” (automatic rate increases) is one of the basic rating components incorporated in the rate structure of any insurance company that issues a Claims-Made Lawyers Professional Liability policy to reflect the increased exposure to the company after the first and subsequent years of coverage.

As an example, if a policy is issued today to a new firm, the exposure to the insurance company would be relatively low since they would only be providing coverage for acts, errors or omissions committed during the first year of coverage. This fact is reflected in the form of a discount off the fully mature premium. However, when the policy renews, the renewal policy will continue to cover the first year of exposure as well as the current year. Therefore, the discount applied to the fully mature premium the second year is less resulting in a premium increase. This step rating process occurs over a specified number of years, generally 5-8, depending on the insurance company. At the end of the step rating process, the premium levels off and will only change if the firm and/or insurance company makes a change that would impact the premium charged e.g. change in limits, rate increases, area of law.

What are considered to be the "Five Most Error Prone Areas of Practice"?

  • Area of Practice

    • Common Errors


  • Personal Injury Plaintiff

    • Missed Statute/ Insufficient Settlement

  • Family Law

    • Failure to discover community assets/ Failure to meet client expectations

  • Real Estate

    • Cost (fee dispute)/ Failure to meet client expectations

  • Estate Planning

    • Not properly drafting estate documents/ Failure to timely execute estate plan

  • General Business Litigation

    • Lack of documentation/ Failure to properly apply the law

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